An all-out trade war with China would cost Australia 6% of GDP



Iron ore mining, Pilbara Western Australia.
STRINGER Image/Shutterstock

Rod Tyers, University of Western Australia and Yixiao Zhou, Australian National University

China accounts for more than a third of export dollars earned by Australia.

The figures, for the 12 months to October, cover the period of coronavirus disruptions and disputes over trade.

They apply to physical exports rather than harder to measure services, and are dominated by record high Chinese takings of Australian iron ore.

But they mightn’t last.

China is changing, transitioning from growth driven by the iron-ore hungry expansion of cities and manufacturing to growth driven more by the supply of services.

Externally, its “belt and road” infrastructure investments facilitate the supply of resources from locations other than Australia, among them the Simandou iron ore and bauxite deposits in Guinea, West Africa that will eventually offer higher quality ore than Australia from a region China may regard as more friendly.




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Even if this source is slow to emerge, China will seek to diversify its supplies of iron ore by other means, as suggested by Australia’s former ambassador Geoff Raby in his recent book China’s Grand Strategy and Australia’s Future in the New Global Order.

One will be to ensure a steady supply from Brazil which, with China, is a member of the BRICS group of major emerging national economies.

Australia produces few manufactured goods and pays for the considerable quantity it imports by exporting commodities, mostly to China.

The loss of this export channel would be serious, but how serious?

Iron ore matters more than we think

Conversation authors John Quiggin and James Laurenceson argue the effects would be small. They point out that mineral exports account for only 1% of Australia’s national income and that China would hurt itself if it cut off the flow.

But China’s size means the damage to China would be proportionately smaller than the damage to Australia.

And while the mining sector is not the largest in Australia’s economy, its growth since 2002 has brought with it a secondary boom in Australian service industries. Australia’s East Coast cities have prospered even while most of the mining has been occurring in the Pilbara.




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The mining boom brought a substantial boost to our terms of trade (the earning power of our exports relative to the cost of our imports), pushing up the Australian dollar and making imported goods much cheaper.

A reversal would see our terms of trade fall and our cost of living rise.

Some commentators place store in our ability to redirect exports of wine and barley, and whatever else is affected by trade disputes, to other customers.

At least for iron ore, however, there are few other customers at current volumes. This suggests a decline in export prices and in Australia’s terms of trade.

Damage to us, a mozzie bite for China

So its worthwhile attempting to quantify the damage from a winding back by China of its imports from Australia.

We have conducted simulations of the effect of shutting down Australia-China trade by 95% in which we allow time for capital flows and production and employment to readjust and assume that monetary policy and fiscal balances remain unaltered throughout the world.

We find the shock to the demand for Australian products is large and it is only partially offset by the redirection of our exports, even with a large depreciation of the Australian dollar.




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The reason for this is that the loss of Chinese exports reduces the rate of return on investment in Australia, forcing financial markets to reallocate finance to other parts of the world.

The effects on Australian gross domestic product and real disposable income per capita are big (6% and 14 %), while those on China are mosquito bites by comparison (0.5% and 2.4%).

It’s wise to be prepared

SunCable is planning the world’s biggest solar array in the Northern Territory.
Apiromsene/Shutterstock

Important things we can do to hedge against such an occurrence include maintaining strong relations with current and potential export destinations and fostering innovations that will allow our export product mix to adjust so as to better service the markets that remain open.

Examples include the proposal by Ross Garnaut to turn Australia into an exporter of green energy and associated plans by Fortescue and others to raise exports of energy by more than the east coast of Australia currently consumes.

Without such innovations a substantial decline in trade with China would cut investment in Australia and cut living standards.

It is, of course, entirely possible that the worst won’t happen, but we don’t think that’s something Australians can bank on.

If our ship does begin to sink, capital and skills will jump off and what we are left with won’t be enough to support us in the manner we have come to expect.The Conversation

Rod Tyers, Winthrop Professor of Economics, University of Western Australia and Yixiao Zhou, Senior Lecturer in Economics, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Australia demands apology from China over ‘repugnant’ slur on Twitter


Michelle Grattan, University of Canberra

Prime Minister Scott Morrison has demanded China apologise for – and Twitter remove – a highly offensive tweet depicting an Australian soldier with a knife to the throat of a child.

Morrison described the tweet as disgusting and utterly outrageous. Australia has protested to the Chinese embassy in Canberra, and a protest is also being made by Australia’s embassy in Beijing.

“The Chinese government should be totally ashamed of this post. It diminishes them in the world’s eyes,” Morrison told a virtual news conference from The Lodge, where he is still in isolation after his trip to Japan.

“Australia is seeking an apology from the Ministry of Foreign Affairs, from the Chinese Government, for this outrageous post. We are also seeking its removal immediately and have also contacted Twitter to take it down immediately.”

Following the recent release of the Brereton inquiry into alleged atrocities by some members of Australian special forces in Afghanistan, the tweet was posted by Lijian Zhao, spokesman and deputy director general of the information department in the Chinese Foreign Ministry.

It said: “Shocked by murder of Afghan civilians & prisoners by Australian soldiers. We strongly condemn such acts, &call for holding them accountable”.

A line in the illustration said: “Don’t be afraid, we are coming to bring you peace!”

Morrison said the repugnant post of a falsified image of an Australian soldier threatening a young child had come from an official Chinese government Twitter account.

It was “truly repugnant” and “deeply offensive” to every Australian.

“[To] every Australian who has served in that uniform. Every Australian who serves in that uniform today. Everyone who has pulled on that uniform and served with Australians overseas from whatever nation,” he said.

“It is a false image and a terrible slur on our great defence forces and the men and women who’ve served in that uniform for over 100 years.”




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Morrison said while there were undoubtedly tensions between China and Australia, “this is not how you deal with them”.

Rather, the way was to engage directly in dialogue between ministers and leaders.

“And despite this terribly offensive post today, I would ask again and call on China to re-engage in that dialogue.

“This is how countries must deal with each other to ensure that we can deal with any issues in our relationship, consistent with our national interests and respect for each other’s sovereignty. Not engaging in this sort of deplorable behaviour.”

Morrison said he hoped “this rather awful event” might lead to a “reset” in the relationship, allowing a dialogue to be restarted where there could be sensible talk about issues — “because this type of behaviour is not on”.

Morrison sought to put the situation in a wider international context.

“It’s not just about Australia. Countries around the world are watching this. They see how Australia is seeking to resolve these issues and they’re seeing these responses.

“This impacts not just on the relationship here, but with so many other sovereign nations, not only in our own region, but like-minded countries around the world who have expressed similar sentiments to Australia about many issues. And so it is important that these things end and the dialogue starts.”




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When he was asked why he didn’t write to Chinese President Xi Jinping directly, Morrison said, “You assume that there hasn’t been such interactions. We’ve constantly sought that engagement. This is not new.”

Asked about the controversial issue of revoking the Meritorious Unit Citation for Special Operations Task Groups who served in Afghanistan between 2007 and 2013, which was recommended by the Brereton report, Morrison said no decision had been made.

This is despite the chief of the Defence Force, Angus Campbell, saying when releasing the Brereton report that he would write to the governor-general asking for the revocation.

“No decisions have been made on that and were decisions to be made on that, that would only be following a further process. And that is where that matter rests right now,” Morrison told his news conference.

Opposition leader Anthony Albanese said he stood with Morrison in his condemnation of the China tweet. He said the opposition would not be asking about it in question time — the matter was above politics.

There was an immediate pushback from China – via Twitter – to Morrison’s attack.

Hú Xījìn, editor of the state-owned Global Times, tweeted:

“It is a popular cartoon that condemns the Australian Special Forces’s brutal murder of 39 Afghan civilians. On what ground does Morrison feel angry over the use of this cartoon by the spokesperson of Chinese FM? It’s ridiculous and shameless that he demanded China to apologize.”

The latest deepening of tensions in the bilateral relationship comes days after the Chinese imposed punitive tariffs on Australian wine.




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The Conversation


Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Officials’ engagement with China especially important in tense times: Morrison


Michelle Grattan, University of Canberra

Scott Morrison has encouraged federal public servants to engage with their Chinese counterparts, saying these are important connections particularly given the tensions in the bilateral relationship.

Answering a question during a virtual forum on Wednesday with federal bureaucrats, Morrison said officials were not burdened like ministers or prime ministers with “the overlays of the international relations”.

“One of the advantages that you would have is to be able to engage on the technical, on the direct, leverage on the relationships that you already have.

“I would see that as an important connection, particularly at a time when there are tensions – and of course there are tensions,” Morrison said. “In those circumstances, we rely more on these official engagements.”

Australia’s trading relationship with China is presently bedevilled by the imposition of impediments on a range of Australian exports; Trade Minister Simon Birmingham and other ministers have not been able to get their phone calls returned by their Chinese counterparts.

Speaking earlier this week, Morrison emphasised that Australia “desires an open, transparent and mutually beneficial relationship with China as our largest trading partner”.

The Secretary of the Foreign Affairs Department, Frances Adamson, said in a Wednesday speech that China may now wrongly believe it can largely set its terms of future engagement with the world.

Adamson said with its rising economic weight “unsurprisingly … China wants to set, rather than merely adopt, international standards. China wants to lead, rather than simply join, international institutions.”

China’s economic recovery from the COVID crisis would be important in how the region and the world came out “from what threatens to be a long and uneven recovery from the COVID-recession,” she said.

“But the questions around China are much more wide-ranging than simply its economic approach. No power this large and globally integrated can escape scrutiny or debate,” she said.

“The rest of the world has done a lot of thinking about China’s power and what it means.

“But it is less apparent that China has carefully considered other countries’ reactions to its conduct internationally. China may have reached a point where it believes that it can largely set the terms of its future engagement with the world.

“If it has, it is mistaken – and that is because there is far more to be gained for China, and for everyone else, through working constructively and collaboratively within the international system, without resort to pressure or coercion.”

At the public service forum, the CEO of the Australian Fisheries Management Authority, Wez Norris, said for those in the “weeds” of Australia’s administrative dealings with China “there doesn’t appear to be a lot of consistency in … how we go about trading off things like domestic commercial interests against our wider trade and relationship interests”.

Morrison said in his reply that the Chinese government had said publicly that “they are not engaging in any sort of political activity in relation to these quite specific issues that are arising in trade.

“Well, we take that at face value, but that is a line and a position that I would have thought that officials can actually repeat in being able to engage on the technicalities.

“Whether it’s dealing with issues on barley or fisheries or any of these sorts of things where there are technical matters being raised … we’ve just got to work the problem.

“That’s what I’m relying on officials to do. I’m not asking officials to solve the international relations issue, that falls to me and ministers and others.”

Morrison said it was “a complex and … difficult environment”. His message to the officials was “keep up the connections and do all you can to improve them and keep the dialogue going at that level, because business and industry are relying on that to enable us to try and mitigate the impact of some of these measures that are being introduced” by the Chinese.

The “stuff” that went on between politicians and leaders was “not something that should have to trouble the working relationship that you’re engaged in”.

Labor’s foreign affairs spokeswoman Penny Wong said Morrison should do more to seek to resolve the problems in the trading relationship with China “at leadership level”.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Scott Morrison’s message to China: Don’t pigeonhole us




Michelle Grattan, University of Canberra

Australia’s actions should not be seen just through the lens of the strategic competition between China and the United States, Scott Morrison has said in a speech rejecting “binary choices”.

With China casting Australia as an extension of America, disrupting trade, and citing multiple grievances, Morrison reaffirmed the importance Australia put on wanting a positive bilateral relationship.

“Australia desires an open, transparent and mutually beneficial relationship with China as our largest trading partner, where there are strong people-to-people ties, complementary economies and a shared interest in regional development and wellbeing, especially in the emerging economies of Southeast Asia,” he said.

Equally, Australia was “absolutely committed” to its alliance with the United States, based on a shared world view, liberal democratic values and market-based economics.

“And at all times we must be true to our values and the protection of our own sovereignty.”

He acknowledged the global competition between China and the US “presents new challenges, especially for nation states in the Indo-Pacific”. Like other countries in the region “our preference is not to be forced into binary choices”.

Addressing the British Policy Exchange on Monday night, Morrison warned that “our present challenge in the Indo-Pacific is the foretaste for so many others around the world, including the United Kingdom and Europe.”

Australia’s pursuit of its interests in the midst of the China-US strategic competition was made more complex by the assumptions made about its actions, he said.

“Our actions are wrongly seen and interpreted by some only through the lens of the strategic competition between China and the United States.

“It’s as if Australia does not have its own unique interests or views as an independent sovereign state. This is false and needlessly deteriorates relationships.

“If we are to avoid a new era of polarisation, then in the decades ahead, there must be a more nuanced appreciation of individual states’ interests in how they deal with the major powers. Stark choices are in no-one’s interests.

“Greater latitude will be required from the world’s largest powers to accommodate the individual interests of their partners and allies. We all need a bit more room to move,” Morrison said.

He said international institutions also had an important role as circuit breakers. “To provide the space and frameworks for meaningful and positive interaction to be maintained, as a bulwark against any emerging divide.”

Morrison talked up the role the OECD had to play “in support of open trade and market-based principles”. The Australian government is currently running a strong campaign to try to have former finance minister Mathias Cormann elected secretary-general of the OECD.

Morrison also noted the importance of the World Trade Organisation in promoting shared interests, as well as the G7-plus, and the Five-Eyes arrangement, where co-operation had extended beyond traditional security to the economic realm.

He lamented that “two of the most important economies in the region – the United States and India” had decided not to joint the Trans-Pacific Partnership and the recently-concluded Regional Comprehensive Economic Partnership respectively.

“Of course, we respect those decisions. But they both remain welcome to join. Our response is straightforward.

“Working with our partners, we plan to make the TPP such a powerful force for open trade and investment that the US and, in the future, India and others will join without reservation. And that includes the UK.

“Interestingly, [China’s] President Xi Jinping has also now expressed interest in possible participation in the TPP,” Morrison said.

“The critical thing about the TPP is that it developed WTO-plus disciplines in key areas of intellectual property, digital commerce and state-owned enterprises.

“These are some of the areas where the WTO has fallen short.”The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Biden win offers Morrison the chance to reshape Australia’s ailing relationship with China


Tony Walker, La Trobe University

Joe Biden’s election as US president presents Prime Minister Scott Morrison with the opportunity to reset Australia’s ailing relationship with China. Encouragingly, Biden has signalled his commitment to rebuilding global alliances and restoring a degree of certainty in foreign policy.

In his victory speech, President-elect Joe Biden talked about an “inflection” moment in America’s history, the opportunity to take a different course.

Australian policymakers should, likewise, take advantage of the Biden victory to reassess China policy settings that, under present circumstances, are not serving the country’s interests.

Emphatically, this is not an argument for a quiescent China policy that disregards Beijing’s bad behavior. Rather, it is a case for more nimble policy-making in Australia’s own national interests.

China’s further stifling last week of Hong Kong’s democratic freedoms by forcing the resignation of pro-democracy legislators is another sign of its disregard of international obligations under the “one country two systems” agreement that heralded the territory’s handover in 1997.

Hong Kong pro-democracy lawmakers resigned en masse last week.
Jerome Favre/EPA/AAP

But whether we like it or not, whether it’s fair or not, whether China is a regional bully or not, Canberra needs to find a way to drag its relationship with Beijing out of the mire.

The Biden victory may facilitate this.

Canberra does not need to wait for a new American policy towards China to strive for a better balance between its foreign and trade policy interests and its security policy imperatives. Those efforts should begin now that the foreign policy deadweight of the Trump administration is being lifted.

The government has just signed a 15-nation regional trade deal that includes China, providing a potential avenue for improved relations. The Regional Comprehensive Economic Partnership (RCEP) is aimed at further liberalising trade in the Asia-Pacific.

Australia’s economic well-being demands a reset.

In its clumsy fashion, Beijing has sought to ease frictions. In an editorial foreshadowing a Biden victory, the Global Times, China’s nationalist mouthpiece, made an interesting reference to Australia

When the US-China relationship is about to see some changes there may be also a window for adjustment to the bilateral relationship between China and Australia. Australia is likely to be under less political pressure from the USA on key issues with China, and whether the Morrison government will continue to play tough with China will largely steer Australia’s economic prospects.

On the face of it, this represents a possible break in the clouds. It will reflect views at senior Chinese government level.

Former Australian ambassador to Beijing Geoff Raby had a point when he told the National Press Club that the China debate in Australia had been reduced to a binary argument between “sycophancy and hostility”. This stifles reasonable discussion of something in between. Raby said:

The main thing with diplomacy is not how loudly you speak but the outcomes you get.

He also made the sensible point that, for all the talk of alternative markets at a moment when China is restricting Australian exports, China will remain, for the foreseeable future, the world’s fastest-growing economy and dominant destination for Australian products.

Soaring iron ore prices in the first half of this year, as China sought to re-inflate an economy hit hard by the coronavirus, mask a slippage in Australian business with China more generally.

China’s economy is already springing back harder and faster from the ravages of the coronavirus pandemic than its competitors.




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The International Monetary Fund predicts China’s economy will grow by 8.2% in 2021 and account for about a quarter of global growth.

These are the realities that are sometimes pushed aside by threat obsession within the Canberra political establishment.

Morrison could do worse than review an Asialink speech he made soon after he was elected prime minister to remind himself of principles he laid down then for dealing with China, and which appear to have been honoured in the breach since.

Then he decried a “binary prism” through which conflict between the US and China was seen as inevitable. He also rejected what he called the “fatalism of increased polarisation”.

“Australia should not sit back and passively wait our fate in the wake of a major power contest,” he said, while extolling the virtues of “regional agency” in which Canberra sought to work more closely with its like-minded neighbours.

This was all sensible stuff.

However, Australia’s alignment with Trump’s chaotic “America First” foreign policy has overwhelmed talk of a Morrison doctrine that emphasises regional connections. In the process, global alliances have been trashed.

This in turn has tested Canberra’s ability to apply basic principles of statecraft by maximising its strengths and minimising its weaknesses in an era in which power balances are shifting.

In all of this, the national media have played a role in amplifying the views of those who would have you believe the country is under constant existential threat. Voices calling for a more measured approach to dealing with China have been drowned out.

A low point was reached this month when a government senator in a Senate committee demanded Chinese-Australians giving evidence about difficulties in a hostile environment were asked to denounce the Chinese Communist Party. This implied a “loyalty test”.

Clunky Australian interventions on critical issues such as Huawei and investigations into the origins of the novel coronavirus have facilitated China’s strategy of portraying Canberra as Washington’s handmaiden for its own self-serving reasons.

Australia’s conspicuous and injudicious lobbying of its Five Eyes partners to exclude Huawei from a buildout of their 5G networks caused more trouble than it was worth.

Morrison’s heavy-handed intervention – after a phone call with Trump – in presuming to appoint himself co-ordinator of a global investigation into the origins of COVID-19 added further to Chinese disquiet.

An inquiry under World Health Organisation auspices was going to take place anyway. Why Morrison took it upon himself to take the lead in instigating an inquiry at a particularly sensitive moment for China remains a mystery.

Joe Biden’s election offers Australia a chance to reshape its relationship with China.
Carolyn Kaster/AP/AAP

In their efforts to get a handle on the form Biden foreign policy might take, Morrison and his advisers could do worse than review the president-elect’s contribution to the journal Foreign Affairs in which he laid out his blueprint for American global leadership.

This is a comprehensive description of how Biden’s foreign policy might evolve in a world that has changed significantly since he served as vice president in the Obama White House. It also demonstrates that Biden would not be outflanked on China policy by his opponent.

His proposal for a global Summit for Democracy to “renew the spirit and shared purposed of the nations of the free world” would be a welcome initiative.

Biden’s reference to how to meet the China challenge is worth noting.

The most effective way to meet that challenge is to build a united front of US allies and partners to confront China’s abusive behaviors and human rights violations, even as we seek to co-operate on issues where our interests converge, such as climate change.

This is the Biden carrot-and-stick formula. Too often in the recent past, the Morrison government has found itself aligned, whether it likes it or not, with the wrong end of the American stick.




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Note: this article was updated on November 16 to take in the trade deal announcement.The Conversation

Tony Walker, Adjunct Professor, School of Communications, La Trobe University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Trump took a sledgehammer to US-China relations. This won’t be an easy fix, even if Biden wins



ROMAN PILIPEY/EPA

Hui Feng, Griffith University

Few would have thought a US-China relationship marked by relative stability for half a century would be upended in just four years.

But US President Donald Trump’s privileged tour of the Forbidden City in November 2017 by Chinese President Xi Jinping now looks like it happened in a bygone era, given the turbulence in the bilateral relationship since then.

The shift in the US’s China policy is no doubt one of the major legacies of the Trump administration’s foreign policy, alongside a renewed peace process in the Middle East.

When Trump’s daughter Ivanka said at the Republican National Convention that “Washington has not changed Donald Trump, Donald Trump has changed Washington”. This would certainly include its handling of China.

Trump was the first US president to be given a state dinner in the Forbidden City.
Andrew Harnik/AP

From strategic partner to competitor

Although China’s rise had been a concern of the previous Bush and Obama administrations, it was the Trump administration that transformed the entire narrative on China from strategic partner to “strategic competitor”, starting with its National Defence Strategy report released just one month after Trump’s 2017 China visit.

This read, in part,

China and Russia want to shape a world antithetical to US values and interests. China seeks to displace the United States in the Indo-Pacific region, expand the reaches of its state-driven economic model and reorder the region in its favour.

This new way of thinking deemed the US’s decades-long engagement strategy, deployed since President Richard Nixon in the early 1970s, a failure.

US President Richard Nixon and Chinese Premier Zhou Enlai toast in 1972.
Wikimedia Commons

Prior to Trump, the US had sought to encourage China to grow into a responsible stakeholder of a rules-based international order.

But the Trump administration believes such “goodwill” engagement has been exploited by China’s “all-of-nation long-term strategy” of asserting its power in the Indo-Pacific region.

According to the Trump administration, this is centred on “predatory economics” in trade and technology, political coercion of less-powerful democracies and Chinese military advancement in the region.




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Trump takes a unilateral, transactional approach

Trump’s sledgehammer approach to the US-China relationship has been problematic at best.

For one, Trump viewed the relationship transactionally, hardly scratching the surface of the deeper structural issues — such as state subsidies and labour standards — that exist between the countries.

He believed he could reduce the massive US trade deficits with China through a “big, beautiful monster” of a trade deal and this would be a silver bullet for both the economy and his re-election prospects.

This explains all the flip-flops during the drawn-out trade negotiations, during which Beijing largely managed to use the deal as bait to keep larger strategic issues off the table.

China and the US signed a trade deal in January, but relations have only soured further since then.
ERIK S. LESSER/EPA

Moreover, Trump’s policies toward China, at least on the trade front, were unilateral. Instead of finding common ground with allies, Washington angered and deserted its allies by invoking punitive tariffs (Canada), renegotiating trade agreements to the US advantage (Japan and South Korea) and reducing its security commitments under NATO.

At the same time, the Trump administration relinquished US leadership in global institutions dealing with trade, climate change and human rights. As a result, the US lost its allies when it needed them most and gave China a new platform on the international stage.




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The China-US rivalry is not a new Cold War. It is way more complex and could last much longer


China hawks get the upper hand

Trump’s China policy has been further mired by competing interests in his cabinet.

According to former National Security Adviser John Bolton, Trump’s team was “badly fractured” in its handling of the trade war against China and its wider China policy.

The spectrum of voices in the cabinet ranged from China moderates such as Treasurer Steven Mnuchin and senior advisor Jared Kushner to sceptics such as US Trade Representative Robert Lighthizer to more radical China bashers such as Bolton, Vice President Mike Pence and Secretary of State Mike Pompeo.

China hawks like Mike Pompeo have become increasingly vocal in their anti-China rhetoric in the past year.
Andrew Harnik/AP

As Trump became increasingly frustrated with a recalcitrant Xi reneging on “the deal” in mid-2019, followed by the outbreak of the COVID-19 pandemic, the China hawks in the administration gained the upper hand.

Although this led to a more coherent approach to addressing the strategic challenges posed by China, the result was more direct confrontations with Beijing and heightened tensions.

The past year has marked a low point in relations with tit-for-tat actions on a number of fronts, including

The China hawks in the Trump administration now advocate empowering the Chinese people to change the Communist Party’s behaviour — just shy of calling for a regime change in China.

China becomes more assertive under Xi

Beijing was largely wrong-footed in dealing with a maverick US president so different from previous administrations it had handled with ease.

However, it would be wrong to assign blame for the deteriorating relationship on Washington alone. It takes two to tango.

As Xi has consolidated his power, China has

The list goes on. And these were not provoked by the US.

China has increased its military exercises near Taiwan in recent weeks, including a simulated invasion of the island.
Taiwan Ministry of National Defense/AP

A new president won’t fix the relationship

It is extraordinary that what started as Trump’s petty complaints on trade with China eventually escalated into what many call “a new Cold War”.

Trump may not have succeeded in completely changing Washington, but his administration has at least shifted the public narrative and strategic view of China among the US elites.

Getting tough on China has become a source of rare bipartisan consensus in a polarised political climate. In fact, even if Trump loses the election to Democratic challenger Joe Biden, a fundamental U-turn in US-China relations is still unlikely.

China could face more challenges with a Biden presidency than another four years of Trump.
Carolyn Kaster/AP

The Democratic Party platform contains similarly harsh criticisms of China. Biden has also written:

if China has its way, it will keep robbing the United States and American companies of their technology and intellectual property.

However, Biden does suggest he would ditch tariffs as means in securing a fairer trade deal with China. And he wants to build a

united front of US allies and partners to confront China’s abusive behaviours and human rights violations.

So, if Beijing was hoping the upcoming election would fix its Trump problem by bringing someone new into the White House, it shouldn’t hold its breath.

The US-China relationship has been drastically changed by Trump — and this won’t be undone easily.




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The Conversation


Hui Feng, ARC Future Fellow and Senior Research Fellow, Griffith University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Hopes of an improvement in Australia-China relations dashed as Beijing ups the ante


Tony Walker, La Trobe University

Speculation China may be seeking to lower the temperature in its fractious dealings with Australia appears to be premature.

This follows confirmation that Chinese customers have been advised to defer orders of Australian thermal and metallurgical coal.

On top of this, Australian cotton exporters have been advised exports will be cut next year, a blow to a business worth about $2 billion annually.

Australian mining giant BHP has received “deferment requests” for its coal shipments, according to the company’s chairman, Ken MacKenzie.

On the face of it, this is the most damaging trade reprisal by Beijing against what it perceives to be Australia’s hostile attitudes to it in tandem with its security partner, the United States.

It seems more than coincidental that just days after Australia took part in a meeting in Tokyo of the Quad (previously known as the Quadrilateral Strategic Dialogue and involving Japan, Australia, India and the US), China took such action.

To put this in perspective, China has targeted Australia’s third-largest export commodity to the Chinese market behind natural gas and iron ore.




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In 2018-19, Australia’s exports to China of thermal coal for power stations and metallurgical coal for steel-making reached A$14.1 billion.

In the latest move in the Australia-China stoush, Chinese customers have been advised to defer orders of Australian thermal and metallurgical coal.
Dan Peled/AAP

The Quad session left no doubt about its purpose. It was squarely aimed at furthering a China containment strategy, and perhaps outlining an Asian NATO.

“Asian NATO” is the description Chinese propagandists apply to the Quad.

Australia finds itself in a grouping that includes a hawkish US Trump administration, a Japan that is understandably anxious about tensions in its own region, and an India that recently found itself in armed conflict with China on its Himalayan border.

In all of this big-power manoeuvring, Australia is the minnow. So it is more vulnerable to Chinese reprisals, trade and otherwise.

In a statement following the Quad, Foreign Minister Marise Payne avoided specific mention of China, but her message was clear. Australia was not hesitating to align itself with its Quad partners in confronting China. The statement said:

Ministers reiterated that states cannot assert maritime claims that are inconsistent with international law, particularly the United Nations Convention on the Law of the Sea (UNCLOS).

This was aimed at China’s refusal to accept a mediation ruling under UNCLOS that contradicts its territorial claims in the South China Sea.




Read more:
China-Australia relations hit new low in spat over handling of coronavirus


However, even if Australia wanted to detach itself from a hard-edged American position on China, it would be difficult given the sort of rhetoric emanating from Washington.

For example, in a statement issued by US Secretary Mike Pompeo after his meeting with Payne, he said they had discussed “China’s malign activity in the region”.

Australia’s circumspect foreign minister would not have said this publicly.

The Pompeo remarks play into a Chinese narrative that Canberra is Washington’s appendage. In the conduct of its regional diplomacy in close co-ordination with the US, Australia tends not to challenge this narrative.

Foreign Minister Marise Payne meets US Secretary of State Mike Pompeo at the ‘Quad’ talks in Tokyo.
Nicolas Datiche/EPA/AAP

In an interview with Nikkei Asia, Pompeo said the Quad would enable participants to “build out a true security framework”. This will not have gone unnoticed in Beijing.

Nor would his description of the Quad as a “fabric” that could “counter the challenge that the Chinese Communist Party presents to all of us”.

Payne would not have gone this far.

In the wake of the Quad meeting, China’s strident mouthpiece, the Global Times, accused Canberra of using the gathering to “promote its own global status”. It asked:

[…] how much strength does Australia own with its limited economy and population? Moreover, if Canberra is bent on infuriating China, Australia will only face dire consequences.

This sort of bombast can be dismissed as simply another case of Beijing letting off steam at the expense of a country that is more vulnerable to Chinese pressures than other Quad members.

On the other hand, Australia’s vulnerability to trade penalties invites the question. What will come next? Will it be Australian wine exports to China worth more than A$1 billion a year, or will gas be the next target?

China has been picking off Australian exports over the past year as relations have soured.

It has slapped tariffs on barley, making the Australian commodity uncompetitive in the Chinese market. It has used non-tariff measures to stifle beef imports from five abattoirs. It has told Chinese students to look elsewhere for education opportunities. It has also discouraged Chinese tourists from visiting Australia.

The latter is moot, since the COVID-19 pandemic means inbound tourism has been stopped.

However, a series of trade reprisals should be deeply concerning for the Australian government as it wrestles with an economy hit hard by recession.

The last thing Australia needs in this environment is for its trading relationship with China to fall off a cliff.

The trade numbers underscore Australia’s unhealthy dependence on China.

In 2018-19, more than one-third, or A$134.7 billion worth, of Australia’s total merchandise exports went to China. On top of that Australia’s services business with China, mainly education, totalled A$18.5 billion.

In the first six months of this year, Australia’s exports to China neared 50% of total exports, mainly due to increased iron ore prices.

This level of business may be advantageous to Australia from a short-term perspective, but in the longer term such heavy reliance on a single market is highly undesirable.

It gives China the option of penalising Australia if Canberra’s policies do not correspond with Beijing’s wishes.

This is precisely what is happening now.

In the circumstances, it is hard to reach any other conclusion than that Beijing is targeting Australia as a means of conveying its displeasure that a regional united front appears to be forming to contain China’s ambitions.

In this context it is worth noting that despite a sometimes acrimonious “trade war” between the US and China, Beijing has, for the most part, refrained from penalising American business.

Of course, China exports far more to the US than it imports.

In the lead-up to the US election on November 3, Australia should be hoping for a Biden victory on the grounds that a more normal diplomatic environment will enable a reset of our relations with Beijing.

The alternative is further nasty surprises weighing on a critical trading relationship.The Conversation

Tony Walker, Adjunct Professor, School of Communications, La Trobe University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

United States’ standing wanes on Lowy Asia power index



Lowy Institute

Michelle Grattan, University of Canberra

The United States has registered the largest fall in relative regional power of any country in the Indo-Pacific during the last year, according to the Lowy Institute’s Asia Power Index.

The index, started in 2018, ranks 26 countries and territories according to the power they wield in the region. It uses multiple indicators across military capability and defence networks, economic resources and relationships, diplomatic and cultural influence, and resilience and future resources.

While the US is still the most powerful country in the region, it has gone from a 10 point lead over China two years ago to five points in 2020, scoring a rating of 81.6.

“Despite its continuing pre-eminence, US standing has waned in all but one of the eight Index measures,” the report says.

It says the closing power disparity with China suggests America, “far from being the undisputed unipolar power, can more correctly be described as the first among equals in a bipolar Indo–Pacific”.

The US lost the most points in measures where China is ahead – economic relationships, economic capability, and diplomatic influence.

Despite the US’s significant advantages, “the current US administration’s unilateral inclinations mean the United States is an underachiever in its ability to wield broad-based power in Asia. In addition, the coronavirus has contributed to a loss of US prestige.

“America has suffered the largest reputational hit in the region for its domestic and international handling of the COVID-19 pandemic.”

The report says while China has been “diplomatically diminished” by COVID it is “holding ground in its overall power”.

“In conditions where most countries are less powerful than a year ago, China’s fast economic rebound from COVID-19 will widen the power differentials between itself and the rest of the region.”

China, which ranks second at 76.1 on the regional power index, has an unchanged score.

“China leads in four of the eight measures of power: economic capability, diplomatic influence, economic relationships and future resources. But the country delivers inconsistent results in the other measures, with stark strengths and weaknesses. By contrast, US performance in the Index still appears more rounded.”

Australia and two other middle powers – Vietnam and Taiwan – were the only countries to gain in comprehensive power in 2020.

“Their competent handling of the COVID-19 pandemic was a necessary, but not sole condition for improving their regional standing.”

Australia ranks number 6 on the index with an overall rating of 32.4. It was previously 7th and has overtaken South Korea. Its greatest improvement was in cultural influence.

“Australia’s comparative advantages as a middle power are most evident in its defence networks, where it ranks second behind the United States. Despite a far more modest military capability, Australia is ranked ahead of the United States for its defence diplomacy with non-allied partners.

“Canberra has led the way in forging variable geometry — bilateral, trilateral, quadrilateral and ‘quad plus’ — defence partnerships with a diverse range of countries, including India, Japan, Indonesia and Vietnam. Australia carries less ‘great power baggage’ and has demonstrated it can be far nimbler in Southeast Asia than its US ally.”

But the report warns of the effect of the contraction of migration to negative levels.

“Dropping out of the demographic ‘Goldilocks zone’ will have adverse implications for Australia’s fundamentals as a young and growing middle power. The failure to reverse this trend in the next few years would result in a smaller, poorer and ultimately less secure nation.”

The report also concludes that Japan will take much of the next decade to recover economically from COVID. It says that of all the countries, “India’s economy has lost the most growth potential through the damage inflicted by the pandemic”.

The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

China’s image problem is worsening globally. It’s time for Beijing to consider a diplomatic reset



UNTV/AP

Kai He, Griffith University

As the increasingly virulent anti-China rhetoric has made clear in recent months, China has not been very popular in countries like the US and Australia for its handling of the coronavirus pandemic.

But new research shows just how extensive China’s image problem is at the moment.

Recent surveys conducted by the Pew Research Centre show a majority of people in 14 advanced economies now hold an unfavourable view of China.

In nine of these countries, including the US, UK, Australia, South Korea and Germany, negative views of China have reached their highest level since Pew began polling in these countries more than a decade ago.

In Australia, 81% of respondents said they viewed China unfavourably, up 24 percentage points from last year, while in the UK, 74% had negative views of China, up 19 points.

Sweden (85%) and the Netherlands (73%) also showed dramatic spikes, rising more than 30 percentage points from 2017.

A more assertive diplomatic approach

Significantly, the survey suggests that perceptions of how China has handled the pandemic heavily influenced people’s views of the country.

As the pandemic has devastated economies and cost millions of lives around the world, it is understandable for people to feel resentment and anger towards China, regardless of whether it is reasonable or not.




Read more:
The world has a hard time trusting China. But does it really care?


Moreover, these unfavourable views might persist for some time, because it is human nature to remember negative things more strongly and in greater detail than positive things.

However, these negative views of China might not be solely attributable to its handling of the crisis.

China’s diplomats have also become increasingly assertive in response to questions about the origins of the virus, pushing back with a so-called “wolf warrior diplomacy”.

The Pew survey should be a warning call for the Chinese government to reflect on its foreign policy practices, especially if China envisages pursuing more of an international leadership role in a post-pandemic world.




Read more:
Behind China’s newly aggressive diplomacy: ‘wolf warriors’ ready to fight back


Emphasis on mutual respect

There are three lessons Chinese diplomats might want to consider.

The first lesson is that good diplomacy is built on mutual respect. And China can earn respect from the world through persuasion — not coercion and propaganda.

For example, an open letter recently sent to Indian media by the Chinese embassy in New Delhi regarding their coverage of Taiwan backfired spectacularly, with India’s Ministry of External Affairs saying

there is a free media in India, that reports on issues that they see fit.

It is true some foreign media have biased and even distorted reports about China. But instead of trying to censor reports they see as biased, Chinese diplomats should instead make counterarguments, ideally in the same media outlets. Let the audience make a judgement call.

Empathy without strings attached

The second lesson is diplomacy should be based on empathy, especially during the pandemic or a similar humanitarian crises.

China has attempted to demonstrate empathy by providing much-needed humanitarian assistance to other countries in the past, but how China conveys the messaging around this makes a big difference.

It is undiplomatic and ridiculous, for instance, to solicit praise and compliments from foreign governments after providing assistance, which is precisely what some Chinese diplomats have done during the pandemic.

China’s diplomats would be wise to keep in mind that humility is a respected virtue in traditional Chinese culture. And in international relations, soft power is more effective if it comes without strings attached.

‘When they go low, we go high’

The third lesson is about the art of diplomacy, which is, in essence, about government-to-government relationships between countries. Diplomats need to know what they should do, and more importantly, what they should not do, in order to maintain good relations with other countries.

For example, the Chinese ambassador to Sweden, Gui Congyou, has attacked the local media and public figures frequently because, as he put it, they “have a habit of criticising, accusing and smearing China.”

Gui has been summoned to Sweden’s foreign ministry more than 40 times in two years and several parties have called for him to be expelled from Sweden.

And in Brazil, China’s embassy strongly protested when Brazilian congressman Eduardo Bolsonaro, President Jair Bolsonaro’s son, blamed China for the pandemic on Twitter.

Ambassador Yang Wanming called it an “evil insult” and the embassy posited that Bolsonaro had contracted “a mental virus” while visiting the US.

China’s diplomats should understand that because of the differing political systems in other countries, it is sometimes normal for politicians and public figures to express controversial views concerning China.




Read more:
US-China relations were already heated. Then coronavirus threw fuel on the flames


How and when to respond is part of the art of diplomacy. Sometimes, a quiet, measured response is more effective than public tit-for-tat bickering.

This is not to suggest China should keep its head down when being bullied by other countries. A wise diplomat should know how to pick a fight with the right target at the right time. In addition, good diplomacy should be built on taking the moral high ground when possible.

Michelle Obama’s famous saying — “when they go low, we go high” — also applies to foreign policy.

Australian journalists were hosted at the Chinese ambassador’s residence for a press event last year, before relations deteriorated.
Lukas Coch/AAP

Lessons for the West, too

These three lessons are not unique to China. The US image has also plummeted internationally due to the Trump administration’s handling of the COVID-19 pandemic, the Pew surveys show.

Australian diplomats might also find these lessons useful for repairing their country’s deteriorating relationship with China.

China’s first premier, Zhou Enlai, famously said,

There is no small thing in diplomacy.

These days, a more sensible and even-keeled approach to diplomacy is what would be best for China, as well as the rest of the world — not more heated rhetoric.The Conversation

Kai He, Professor of International Relations, Griffith University

This article is republished from The Conversation under a Creative Commons license. Read the original article.